The rules of successful trading

Every trader is different and to succeed you’ll need to find the strategy that fits your style and your needs, however, there are still some basic rules that all top traders follow. Trading is built on self-discipline and if you’re careless, it will cost you. These rules make it easier to consistently take the right approach.

Have a plan and stick to it

Before you ever start trading, you should determine your priorities and decide on an overall strategy. You should also have a plan for what you do day to day, and you shouldn’t be tempted to stray from it just because you think you see a good opportunity. Although you may amend your approach over time as you learn more, you should always do so in a considered way.

Invest in yourself

Before you invest in assets, invest in getting yourself a fast computer, reliable internet, a subscription stock analysis service and a good trading calendar. Take the time to develop your own skills through reading, talking to experienced traders and making fantasy trades. Trading is a profession and you need to approach it with professional thoroughness.

Do your research

Don’t invest in assets that you don’t understand. Before considering property, have it thoroughly surveyed. Before considering stocks, read a company’s business plans and profile their senior personnel. If you’re looking at a new sector, take the time to understand how it works. Relying on others to do all this for you can make you vulnerable.

Don’t take on too much

It takes time to get to grips with trading so make sure you have time to learn each aspect of it thoroughly before moving on to another. While it’s good to understand different asset types and be flexible about your options, trying to follow multiple areas at once can lead to confusion and error, especially when you’re inexperienced.

Don’t be emotional

Trading is all about the numbers. If you hold onto stocks for too long because you’ve developed an emotional attachment to them, you’ll lose out. If you become overexcited and convinced of your own genius, you’ll make bad decisions. You need to be alert to your natural psychological biases (everybody has them) and strive to keep a cool head.

Avoid magical thinking

Do you ever get the feeling that you’re figuring it all out, that you’re starting to see a pattern emerge that could make it possible for you to beat the system? Stop. Just stop right there. Beliefs like that are a fantastic way to lose money fast. If there were really such a system, other people would have figured it out long ago.

Keep learning

No matter how long you keep trading for, you’ll never figure it all out. Being aware of your own limitations, paying particular attention to your mistakes and taking every opportunity to learn as you go along is vital to the ongoing process of becoming the best that you can be.

If you stick to these rules, you may still not become the most successful trader the world has ever seen, but you’ll stand a much better chance of enjoying success than if you don’t.